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Grade a lease quote against fair-deal benchmarks before you sign, spot the red flags, and print a blank worksheet to fill in at the dealership.
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A lease payment on its own tells you almost nothing. The same $450 a month can be an excellent deal on one car and a poor one on another, and the only way to know is to check the four inputs that produce it: the selling price, the money factor, the residual value, and the fees. Dealers present the output. Your job is to audit the inputs.
This tool grades all four against current market benchmarks and flags anything out of line. It also recomputes the payment from your numbers, so if the quote on the worksheet is higher than the arithmetic supports, you will see the gap and can ask what it covers.
The single most useful sanity check is the 1% rule: a good lease payment, before tax, is roughly 1% of MSRP or less. On a $42,000 car that is about $420 a month. It is a rough heuristic rather than a law — luxury cars with strong residuals can beat it, and cars with weak residuals rarely reach it — but a payment at 1.4% of MSRP is a reliable sign that something in the deal needs work.
The most commonly overlooked input is the money factor. Price gets negotiated in the showroom where you can see it; the rate gets set in the finance office where you cannot. A 0.00050 markup adds roughly $30 a month, which quietly cancels out a $1,000 price concession over a three-year term.
Print the blank worksheet below and take it with you. Filling in the same six fields for every quote makes offers comparable, and asking a finance manager to complete the residual and money factor lines in writing changes how the conversation goes.
Capitalized cost = Selling Price + Fees - Cash Down Residual = MSRP x Residual % Depreciation = (Cap Cost - Residual) / Term Rent charge = (Cap Cost + Residual) x Money Factor Base payment = Depreciation + Rent Charge 1% rule: Base Payment / MSRP should be <= 1%
Take these six numbers from every dealer you talk to, in writing, before discussing payment. Six comparable fields turn three incompatible pitches into a ranked list. Use your browser's print button on this page to take a copy with you.
Blank lease worksheet — one column per dealer
| What to ask for | Dealer A | Dealer B | Dealer C |
|---|---|---|---|
| MSRP including destination | |||
| Negotiated selling price | |||
| Discount off MSRP (%) | |||
| Money factor (and base MF for my tier) | |||
| Residual value ($ and % of MSRP) | |||
| Acquisition fee | |||
| Documentation fee | |||
| Dealer add-ons (itemized) | |||
| Annual mileage allowance | |||
| Excess mileage rate per mile | |||
| Disposition fee at lease end | |||
| Total cash due at signing | |||
| Base monthly payment (pre-tax) | |||
| Monthly payment with tax |
Fair-deal benchmarks used by this grader (2026 market)
| Input | Good | Acceptable | Red flag |
|---|---|---|---|
| Discount off MSRP | 10%+ | 5 - 9% | Under 2% or above MSRP |
| Money factor / APR | Under 0.00125 (3%) | 0.00125 - 0.00208 (3-5%) | Above 0.00292 (7%) |
| Residual (36 mo) | 60%+ of MSRP | 52 - 59% | Under 45% |
| Total fees | Under $900 | $900 - $1,400 | Above $2,200 |
| Cash at signing | $0 | Under $1,000 | Above $2,500 |
| Payment vs. MSRP | Under 1% | 1 - 1.25% | Above 1.25% |
These are general benchmarks, and two caveats matter. First, residuals are model-specific: a Toyota with a 64% residual and a domestic sedan with a 44% residual are not comparable, and no amount of negotiating fixes a weak residual. Second, discount expectations vary with supply — a high-demand model in short supply will not discount 10%, and holding out for it wastes your time.
Look up the actual base money factor and residual for your model, term, and region before you negotiate. The Edmunds forums and LeaseHackr publish both monthly. Then use the money factor decoder to convert and check for markup, and the full lease calculator to build the payment from your target numbers.
Finally, before you commit to leasing at all, confirm it is the right structure for you. Leasing wins for people who drive predictable miles and want a new car every few years; buying wins for high-mileage drivers and anyone who keeps cars a long time. Run your numbers through the lease vs buy calculator, check your state's tax treatment with the state lease tax calculator, and read the negotiation guide before your first dealer visit.
Check four inputs rather than the payment: the discount off MSRP (aim for 6-10% before incentives), the money factor converted to APR (under 3% is good for strong credit), the residual percentage (60%+ on a 36-month lease is strong), and total fees (under $900 is reasonable). As a quick screen, a good pre-tax payment is about 1% of MSRP or less.
The 1% rule says a good lease has a pre-tax monthly payment of no more than 1% of MSRP with zero down. On a $42,000 car that is about $420 a month. It is a screening heuristic, not a law — luxury models with high residuals and subvented rates can beat it, while cars with weak residuals rarely reach it. Use it to decide which quotes deserve a closer look.
Ask for six things in writing: MSRP, negotiated selling price, money factor plus the base money factor for your credit tier, residual value in dollars and as a percentage of MSRP, an itemized fee list, and the mileage allowance with the excess mileage rate. Requesting these by email before visiting lets you compare dealers on identical terms without showroom pressure.
Ideally nothing. A down payment on a lease is a capitalized cost reduction: it lowers the monthly payment but not the total cost, it is taxable in most states, and it is not refunded if the car is totaled or stolen — insurance pays the leasing company, not you. If you want a lower rate, ask whether the lender offers refundable multiple security deposits instead.
Common reasons are sales tax not included in the calculation, fees capitalized into the payment rather than paid at signing, dealer add-ons rolled in, or a money factor higher than the one you were told. Ask the finance manager to itemize the difference. An unexplained gap of $20 a month is $720 over a three-year lease.
The monthly payment is usually lower, but the total cost is often higher. A 48-month lease typically extends past the factory bumper-to-bumper warranty, carries a lower residual percentage, and keeps you in the car through its heavier maintenance years. Compare 36 and 48 months on total out-of-pocket cost rather than monthly payment.
Partly. The acquisition fee is set by the lender and rarely moves, though it can sometimes be capitalized instead of paid upfront. Documentation fees are capped by law in many states. Dealer add-ons — paint protection, fabric guard, VIN etching, nitrogen tires — are pure margin and you can decline all of them. Registration and title are government charges and fixed.
Leasing generally suits drivers with predictable, moderate mileage who want a new car every two to four years and value a lower payment. Buying generally wins for high-mileage drivers, anyone keeping a car past five years, and anyone who wants to stop making payments eventually. The answer depends on your mileage, how long you keep cars, and your state's tax treatment — run both through the lease vs buy calculator with your real numbers.